Tashkent, Uzbekistan (UzDaily.com) -- On 25 April, the Senate Committee on Budget and Economic Reforms held a seminar on the topic “Reducing the shadow economy: problems and solutions.”

The seminar was attended by members of the Senate, senior officials of ministries and departments, as well as representatives of the media. An exchange of views took place on the work to be done to reduce the shadow economy.

Thus, in recent years, in order to reduce the share of the shadow economy and create equal conditions for competition, with the adoption of the new edition of the Tax Code, 84 tax benefits have been abolished, and recently another 66 different benefits. In turn, the practice of providing individual benefits has been completely abandoned.

Measures have been taken to reduce the shadow economy by improving tax administration and simplifying the tax system, and widespread introduction of an automated system into the economy.

In order to equitably distribute the tax burden on the economy, the VAT rate was reduced from 1 October 2019 from 20% to 15% and from 1 January 2023 to 12%.

In accordance with the Decree of the President of the country from 6 September 2019 “On measures to introduce modern information technologies into the payment system in the field of trade and services, as well as strengthening public control in this area”, retail outlets and the provision of online cash register services have been equipped equipment or virtual cash register system.

In the tax sphere, through digitalization, the practice of limiting the human factor and managing tax risks has been introduced. Thus, as a result of the development of new software products, such as “E-ijara”, “E-imtiyoz”, “Value added tax payers”, “Tax audits”, “Tax benefits coefficient”, “K-Savdo”, about 50 types of interactive services.

In addition, expanding the tax base by reducing the shadow economy is identified as one of the main tasks in ensuring the well-being of the population through sustainable economic growth within the framework of the Uzbekistan 2030 Strategy.

The seminar participants also drew attention to the fact that some problematic issues remain regarding the reduction of the shadow economy.

In particular, the authorized bodies did not take control of shadow activities in a timely manner, and the Accounts Chamber established the possibility of attracting an additional 3.6 trillion soums to the budget in 2023, of which the recovery of 1.2 trillion soums was ensured.

It was found that only 42% of the relevant entities are covered by the labeling system.

At the seminar, participants noted that there are conditions for the withdrawal of part of the products grown by agricultural producers into underground circulation, therefore it is necessary to prevent the shadow economy in this area, as well as to digitalize yields, accounting for manufactured products and processing stages in this area.

At the seminar, it was especially emphasized that work has not been organized to stop the “envelope” method of paying wages by legal entities in the private sector, which is systemic in nature, and unofficial hiring.

In addition, it was noted that there are cases of tax evasion by understating the actual turnover in the field of trade and services, and transactions related to cash remain the main method of carrying out shadow economic activities. Suggestions were made to identify measures aimed at preventing it.

Recommendations were developed to resolve issues discussed during the seminar.